An optimistic attitude is a must-have for any business owner. But planning only for best-case scenarios can lead you into trouble. A single unfortunate incident can take away all you’ve worked to build. A fire…a flood…a wrongful termination lawsuit….an employee injury....the list goes on. The good news is that you can protect yourself and your company by carefully managing these risks.Insuring Against Small Business Risks

A well-designed risk management program is key to the long-term security of your business. This often comes down to having the proper insurance coverage for specific risks.

Property protection. Start with insuring against property loss. As a first step, you should inventory your property assets. Next, consider how your business would be affected if these assets were lost or destroyed. Then, make sure you have adequate insurance coverage. A typical policy will provide replacement cost value for your building and the actual cash value for other property.

Business interruption. If your facility becomes temporarily unusable, you would ideally move to a temporary location during repairs. However, traditional property insurance won’t cover this move or the loss of income while you wait. Adding business interruption coverage to your property insurance can protect you from these losses. Your operating expenses and lost income will be recovered during repairs. This will allow you to maintain payroll, so you can rely on your workers to help with the cleanup.

Liability risk. This presents another concern for small business owners, and can include claims against you for:

• Bodily or other physical injury;
• Personal injury, such as libel or slander;
• Injury from your advertising (which could include things like libel, slander, invasion of privacy, and copyright infringement); and
• Property damage as a result of your products, premises, or operations.

Small businesses often protect themselves from these liability risks with commercial general liability insurance, or CGL. CGL allows you to continue normal operations while dealing with real or fraudulent claims. It also pays to defend and settle such claims.


Key person losses. Many small businesses are built around the talents and expertise of a few individuals. Suddenly losing a key employee due to death or illness could cripple your operations. “Key person” insurance can provide financial stability and keep your business afloat during times of transition.

Employee injury is another very real concern. Small businesses are responsible for compensating workers who are injured or become ill on the job. These medical and lost wage payments are usually covered by workers’ compensation insurance.

You can help control your workers’ compensation premiums by managing exposures and promoting safety. Having the proper pre- and post-accident procedures in place can drastically reduce the severity of a workers’ compensation claim. Implementing a comprehensive safety program can also reduce the accident rate. These two steps can greatly increase your long-term savings.

Electronic data. Many businesses store customer data online, which leaves them vulnerable to cyber crime and liability. A large-scale breach can devastate your business. Along with maintaining tight data and Internet security, you may opt for cyber liability insurance. This coverage helps protect your business from damage in the case of cyber attacks, data breaches, and other digital exposures.

Environmental exposures may pose another threat, depending on your industry. You can determine your level of exposure with an environmental risk analysis. Keep in mind that most commercial insurance policies contain pollution exclusions, meaning you may need environmental insurance to protect your business.

Employee lawsuits. Every stage of the hiring and employee management process leaves you vulnerable to a lawsuit. While many of these lawsuits may be groundless, defending against them is costly and time-consuming. Managers, supervisors, and HR should follow best practices and comply with all employment and nondiscrimination laws. Employment practices liability insurance can also protect your company against wrongful termination, discrimination, and sexual harassment lawsuits.

Supply chain interruption. A supply chain that includes third-party suppliers may also prove problematic. A disaster that interrupts your supplier’s regular business operations could slow down or even halt your production. But you can reduce this risk with supply chain insurance, which covers losses you incur as a result of such an interruption.

Of course, not all of these risks and insurance products will apply to your business. But insurance should be a key component to your risk management plan. Your efforts should also include prevention, training, and contingency planning. In addition, consider seeking out professional legal advice when signing contracts; this protects you from unintentionally accepting risk from suppliers and customers. After all, you’re working to protect your most important investment: the business you’ve built.

How to Prevent Workplace Injuries and Protect Your Employees

Topics: risks, injury, small business

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